Saturday, May 17, 2014

P.J. Nayak Committee Recommendations on Governance of Boards of Banks in India - consequences and effects on retirees and emloyees

We reproduce below the circular issued by AIBRF on the above subject.

Quote

Committee was constituted by Reserve Bank of India under the chairmanship of Shri P.J.Naik to review governance of Boards of banks in The committee has submitted the recommendations which will have far reaching consequences on functioning and ownership of public sector banks in India. If recommendations given by this committee are implemented all public sector banks will stand privatised and will get status they were enjoying before nationalisation of banks in 1969 including adding “ Limited” word with their names.

MAJOR RECOMMENDATIONS OF THE COMMITTEE

(1) Government holding in public sector should be brought below 51

(2) Nationalisation Act and State Bank of India Act should be repealed (3) The public sector should be incorporated under Companies Act and word “Limited” should be added with the respective name as per the legal requirement of this act. (4) The public sector banks will come out of purview of CVC/CBI (5) Performance of public sector will not be monitored by Finance ministry.(6) Equity owned by the government after reducing holding below 51 percent should be transferred to the newly formed Investment Company. (7) Banks will have to arrange requirement of additional capital either from internal generation or tapping the capital market and will not look to the government for budgetary support. (8) Bank functioning and survival will depend on its performance and quality of assets and profitability.

These recommendations if implemented are nothing but an attempt to privatise public sector banks and hand over huge national financial resources mobilised in last 45 years in the hands of corporate sector which will be used for their benefits rather than for welfare of common

The report of the committee will be placed for adoption before the new government which will be in place in next few days.

The full report is available on Reserve Bank of India web-site.

CONSEQUNCES AND EFFECT IF RECOMMENDATIONS OF THE COMMITTEE ARE IMPLEMENTED

(1 ) The employees and retirees will lose WRIT JURISTICTION to protect their legal right. Legal recourse available will be through civil suits

(2) On scrapping the Nationalisation Act, constitutional guarantee available at present for payment of pension will stand withdrawn.

(3) Bipartite mechanism available for deciding service conditions of employees / retirees may be under threat

(5) Nation savings and precious financial resources will go under the control of private hands which could threaten financial stability of the country which we have witness in western countries during sub-prime crisis of 2008.

AIBRF STAND

We strongly oppose these recommendation and if implemented could prove dangerous and divesting for the nation and common people. We shall lunch agitational programme if the recommendations are not rejected by the government.